Oil prices edged higher in Asian trading Thursday following a U.S. government report that showed an unexpected fall in gasoline stocks amid peak summer driving season demand.
Light, sweet crude for August delivery gained 11 cents to US$69.08 a barrel in electronic trading on the New York Mercantile Exchange midmorning in Singapore. The contract climbed more than a dollar to end at US$68.97 Wednesday.
Brent crude contract for August delivery rose a cent to US$70.56 a barrel on the ICE Futures exchange in London.
"The market is reacting to the surprising result," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "The market had expectations of products builds, but results showed draws in both gasoline and distillates even though crude stocks increased."
In its weekly inventory report, the U.S. Energy Department's Energy Information Administration said gasoline inventories dropped by 700,000 barrels in the week ended June 22, contrary to the 1.1 million gain that had been expected by analysts polled by Dow Jones Newswires.
However, crude oil supplies rose by 1.6 million barrels to 350.9 million barrels last week, above the average estimate of a 1 million barrel increase.
Refinery utilization rebounded 1.8 percentage points to 89.4 percent, higher than estimates of a gain of 0.8 percentage points.
The weekly petroleum supply snapshot has been watched closely during a spring and early summer, during which an unusually high number of refinery outages have led to high oil and gasoline futures prices and record U.S. gasoline prices at the pump.
"Gasoline demand stays strong. While it is still early in the driving season, June demand has now moved close to the all-time record for any month," said Barclays Capital analyst Paul Horsnell.
The report also said that distillate stocks, which include heating oil and diesel fuel, decreased by 2.3 million barrels and remain in the middle of average for this time of year. Analysts expected an increase of 200,000 barrels.
In other Nymex trading, July heating oil futures added 0.29 cent to US$2.0275 a gallon (3.8 liters) while natural gas prices for August delivery fell 1.8 cents to US$7.065 per 1,000 cubic feet.
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